This is the second in our series of letters we've written to the Wall Street Journal in the past week or so, otherwise known as "Letters That the Wall Street Journal Ain't Gonna Publish, or, I'm Too Lazy to Write a Special Blog Posting for Today, So I'm Glad They Didn't." Or you could just call it "Today's Blog Posting." Anyway:
Color me (pleasantly) surprised. I had no idea, from my previous experience with Ralph Nader [this was written for Norman Kurland to send], that he would come out in favor of restoring the rights of private property to corporate shareholders. ("Nader Kindles Fires of Revolt," Wall Street Journal, June 24, 2011, C1.)
Nader's demand that Cisco Systems start paying out bigger dividends probably wouldn't increase share value. It would, however, restore some of the traditional rights of private property, e.g., the right to receive the "fruits of ownership" (income), taken away from minority owners in such decisions as Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668. (Mich. 1919), in which the Michigan Supreme Court did affirm the right of minority shareholders to a dividend . . . but only if (under the "Business Judgment Rule") the withholding of dividends did not harm the company.
Kudos to Nader for championing the property rights of minority owners, and challenging the erroneous belief that retained earnings are essential to financing new capital formation. Let's finance growth by using the commercial banking system and the Federal Reserve as intended, by discounting and rediscounting eligible paper. Let's make all dividends tax deductible at the corporate level, and put corporate income in the hands of people who will spend it on consumption to sustain effective demand at the level needed to make new capital financially feasible and accessible to enable all citizens to become owners of newly issued shares.